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Asia Pacific investors become primary source of capital for real estate globally 

19 April 2023, Amsterdam – In 2022, capital raising activity remained strong despite the uncertain market conditions, with €246 billion of new capital raised for investment in non-listed real estate globally.  

The Capital Raising Survey 2023, published today by ANREV, INREV and NCREIF, reveals only an €8 billion decline from the capital raised in 2021, when a record high €254 billion was raised following the height of the Covid-19 pandemic.

This resilience comes in the face of sharp market deterioration in the latter half of 2022. However, this is likely a result of strong capital raising activity taking place in H1 2022, given the change in sentiment and rapid interest rate increases across the globe in the second half of the year.

Relative to the 2021 results, capital raised in 2022 decreased for all three regions – Europe, Asia Pacific, and North America – however remain broadly in line with the long-term annual averages. Vehicles with global strategies were the only category to see a rise in capital raised, with an increase of €8 billion to €64 billion in 2022. This is now almost on a par with €65 billion raised for European strategies, but still some way behind the €85 billion raised to target North America.

The weak H2 2022 non-listed global real estate performance results and ongoing market uncertainty are starting to negatively feed into the near-term capital raising outlook. Over the next two years, a lower number of market participants (62%) are expecting to maintain or increase capital raising activity – a sharp contrast when compared with 2021 (75%). The number of respondents expecting to decrease their capital raising activity in the next two years is the highest since 2018[1], at 8% for 2022.

European investors, pension funds and insurance companies lose dominance 

For the first time, Asia Pacific investors became the primary source of capital for real estate globally, contributing 35% of total capital raised. This comes at the expense of European investors who saw their share of capital raised decline to 30% in 2022. North American investors contributed 34%.

With ongoing global uncertainty surrounding investment decisions, the reversal confirms the 2023 Investment Intentions findings that European investors are taking a more cautious approach than their peers. The shift is largely the result of differing monetary policies and the fact that Asian Pacific investors are more under-allocated to real estate than their peers. Central banks in the US and Europe tightened their monetary policies while monetary conditions across the Asia Pacific region are looser, which has had a direct impact on allocations, due to the denominator effect. The end result is a notable narrowing in the gap between target and current real estate allocations for many investors globally, however the average gap is still a significant c 200 bps for Asian Pacific investors[2]

Regional differences are also evident when looking at the results by investor type. Echoing the earlier results, sovereign wealth funds and government institutions – the two investor types that dominate Asia Pacific – have grown to a combined share of more than 15% of the total capital raised globally in 2022. This is the highest share since inception of the survey. 

Pension funds and insurance companies continued to decline in importance as a source of capital, with the combined contribution of both groups falling to 53% of the total. Equally, for the very first time in the history of the survey, the combination of pension funds and insurance companies contributed less than 50% of the total capital raised. This supports the view that European investors are less active, as they contribute the most to pension funds and insurance companies in this survey. 

North America leads interest in global strategies

Managers in North America had the most diverse outreach of all, with less than 50% of the total capital raised targeting their home region in 2022. Outside of their region, North American investors favoured global strategies (34%). European investors also showed a notable interest in global strategies with 10% of their 2022 allocations, just behind 11% targeting North American strategies. 

However, in Asia Pacific and Europe, domestic investors dominated capital raising activity in their respective regions – as in previous years. Managers located in Asia Pacific accounted for the highest share of local capital, with 83% of the total raised in 2022. While European managers raised 76% of the total capital targeting Europe over the same period.

Non-listed vehicles remains vehicle of choice

With 56% of total equity raised in 2022 – the highest since 2015 – non-listed real estate funds remained the most popular route to invest into real estate globally. 

In keeping with the long-term trend, separate accounts maintained its position as the second most preferred vehicle type – making up 21% of the total capital raised in 2022, up from 19% in 2021. Joint ventures and club deals also reported a notable gain in allocations, raising their share of capital from 8% in 2021 to 11% in 2022.

Interestingly, although the 2023 Investment Intentions Survey revealed consistent demand for European non-listed real estate debt strategies – with 62% of respondents planning to increase near-term allocations – non-listed debt products saw the biggest year-on-year decrease in capital raised. For the first time since 2016 the amount of capital raised for non-listed real estate debt was lower than for joint ventures and club deals, falling to 8% from 11% in 2021. This decline may reflect the fact that, while investor demand remains strong, it could be limited by supply, particularly in Europe and Asia Pacific where private debt markets are still in early stages of development. Absence of European investors in non-listed real estate debt strategies was most notable, standing at 4.4% of their total capital raised in 2022, in contrast to 8.2% and 7.7% shares by the Asian Pacific and North American investors, respectively.

Residential and industrial/logistics maintain position as Europe’s preferred single sector strategies 

European strategies witnessed a sharp increase in demand for non-listed / commingled real estate funds / private REITs, increasing from 45% in 2021 to 68% in 2022 – the highest share on record. This is also the biggest year-on-year increase on record for any vehicle type. Although non-listed funds dominate, there are visible differences depending on the target sector, investor preferences, and ability to access specialist knowledge. 

When looking at sector preferences, multi country and single country strategies are both almost equally popular when targeting Europe. When looking at the single sector strategies, residential was the most popular sector, accounting for €6.7 billion of capital raised. This is closely followed by industrial/logistics with €4.9 billion, and offices with €2.9 billion. Vehicles targeting retail only raised around €1 billion, becoming the fifth preferred single sector. 

In recent years, the offer from single sector funds has become richer with both traditional and alternative sectors gaining more traction, with a shift in preferences towards alternative. For example, European senior living surpassed retail, with almost €1.2 billion of capital raised in 2022.

Core strategies in demand 

The majority of capital raised for European strategies in 2022 targeted core strategies, echoing the preference for less risky strategies exhibited in the 2023 Investment Intentions study, where 46% of investors favoured core strategies when targeting Europe.

Capital raised for debt vehicles was particularly focused on senior debt, with more than 70% allocated to such strategies. Junior and other subordinated debt represented 27.4% of the total capital raised for debt vehicles, while the remaining 2.2% was raised for mixed strategies.

Iryna Pylypchuk, INREV’s Director of Research and Market Information, said: ‘Sharp market deterioration and the contrast in global real estate performance highlights 2022 as a year of two halves, and the sentiment is deteriorating as we moved into 2023. While the asset class has a long-term investment horizon, it’s clear that ongoing market uncertainty is now negatively impacting the near-term capital raising outlook.

‘This survey reveals the rapid shifts in preferences as markets undergo fresh shocks and uncertainty persists. The rise of Asian Pacific capital on the global playfield stands out. There are also certain anomalies, such as the disparity between investor interest in, and capital raised for, private real estate debt. There are a lot of nuances around equity strategies too, how investors prefer to access different markets and strategies, depending on the maturity of segment, sector and investor domicile. What is a temporary blip and what is a major shift is difficult to disentangle at this point in time.’

[1] When this question was first included in the survey
[2] Investment Intentions Survey 2023


– Ends –

For further information, please contact: 
Johlyn da Prato, johlyn.da.prato@inrev.org  | +31(0) 621397456
Justin St Clair-Charles, inrevteam@firstlightpr.com | +44 (0) 7769 644 059
Ellie Rust, inrevteam@firstlightpr.com | +44 (0) 7460 325 392

Notes to Editors

About INREV

INREV, the European Association for Investors in Non-Listed Real Estate Vehicles, was launched in May 2003 as a forum for investors and other participants in the growing non-listed real estate vehicles sector. The association represents and reflects an industry with a total value of €2.8 trillion and INREV members deliver €385 billion of stimulus to the real economy of Europe. 

INREV has 497 members which include 127 of the largest institutional investors as well as 40 of the 50 largest real estate fund managers, plus banks and advisors across Europe and elsewhere. 

The non-profit association is focused on increasing the transparency and accessibility of non-listed vehicles, promoting professionalism and best practice, and sharing knowledge. It is based in Amsterdam, the Netherlands.